Economic Analysis of Barbados

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Macroeconomic Strengths:
One of the greatest measurements of economic activity is a country’s Gross Domestic Product. Gross Domestic Product is calculated in a given period of time, typically a year, and shows whether or not a country is producing more or less goods and services than it had in previous years. GDP is also positively correlated with the country standards of living. If the real GDP increases year after year it is fair to say to the country’s economy is at least minimally volatile and will foster grow from outside investment in the long run. Therefore in accessing whether or not GE should invest $100 million in the universal parks market in Barbados, we must first analyze the GDP of Barbados. As seen in the chart below, Barbados has had consistent growth during the last ten years. Even while facing the global economic crisis the GDP of Barbados only fell $115 million from 2008 to 2009. Based on the fact that tourism accounts for a significant portion of Barbados’s total economy, and that the travel industry was one of the hardest hit by the recession, it is fair to say that this economy is stable. Statistics show that tourism has begun to rebound; an investment in universal parks in Barbados has the potential to pay significant dividends in the years to come. Furthermore an investment of $100 million into tourism could cause a multiplier effect strengthening the overall economy further as long as the marginal propensity to consume is great than it is to save.

Barbados GDP growth 2000 - 2009

Barbados Rate of Inflation 2000 - 2009
Uncertainty about Barbados’s future inflation rate may discourage investment, however the current inflation in Barbados is approximately 5.5%; this is perceived as fairly low. Inflation is the rise in the costs of goods and services, this is important because when looking to invest in a country you want to ensure that your input costs remain...
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